I have worked for more than 40 years in the Retail industry, the last 20+ years in the Sporting Goods industry, primarily in senior merchant positions. I am widely regarded in the sneaker industry as a Sporting Goods and Athletic shoe expert. I have one of the top 1% most viewed LinkedIn profiles with nearly 9500 LinkedIn connections. I was named by Complex Magazine to “30 Must-Follow Sneaker Writers and Bloggers on Twitter”, with over 13,000 followers (@NPDMattPowell). I frequently make presentations to senior executives of Athletic retailers and brands and am often quoted as industry expert in major business publications. I am the Sports Industry Analyst for The NPD Group. the sports industry’s primary source for research and analysis

Sneakernomics: Will Kanye West Help Adidas Sales?

The music industry and the sneaker business have been entwined for decades. We only need to recall Run-DMC and what they did for AdidasAdidas, or The Ramones wearing Chuck Taylors to understand the importance of this relationship. Brands have “seeded” the celebrity market for years to get exposure for their products.

In recent years, sneaker brands have begun doing footwear collaborations with musicians, artists and celebrities. Many of these collaborations are highly coveted by collectors and fans. The goal of this blog is to explore the reasoning and value behind these collaborations.

For the most part, the main goal for collaborations is hype. The hype works both ways. The celebrity and the brand both hope to gain prestige. The celebrity is typically not compensated (beyond free shoes for friends and family). The celebrity gets bragging rights for having a shoe with their name on it, while the brand gets to bask in the celebrity’s glow. Retailers who are chosen to sell them get an aura of coolness as well. All hope to get mentions in the fashion and sneakerhead press.

The celebrity’s design involvement is very limited. First of all few celebrities have real design talent and none have any shoe building skills. The brands will ask the celebrity about preferences and desires (“Teal is my favorite color”; “I love unicorns”) and these personalized elements are incorporated into an existing shoe design.

These shoes are not sold in commercial quantities. The pairs available are typically less than 5000. (By contrast, according to my analysis of the data from www.sportsonesource.com, Americans bought more than 300 million pairs of shoes last year). All the collaborations added together would barely move the sales needle for the industry.

Because these shoes are limited in availability, they are often in high demand and can claim high multiples in re-sale price on the Internet. Because these limited shoes are in high demand, there is often a mistaken assumption that they could or would sell well in commercial quantities.

Recent history would argue against that. A decade ago, Reebok tried to commercialize their relationships with artists Jay-Z and 50 Cent, two very important artists of the time. I was in the Villa store on N. Broad in Philly for the first S. Carter drop (Shawn Carter is Jay-Z’s real name). The shoes sold out very quickly. The atmosphere was electric.

Reebok decided to try to build on that small success, by making many more pairs and opening up to a much broader distribution. The next, slightly larger, delivery did very well, so Reebok ramped up production even more. At the same time they made the G-Unit shoe for 50 Cent, again trying to commercialize the relationship.

Both mass market efforts failed miserably. There simply was not enough of a market for the amount of pairs manufactured. Markdowns were taken, orders cancelled and the bulk of the shoes were liquidated through off price retailers. No further shoes were released and the relationships ended.

Similarly the Pharrell Williams/ Reebok “Ice Cream” collaboration went down in flames. The Pharrell/Palladium deal never got off the ground. I cannot recall a single celebrity collaboration has been commercially meaningful at scale.

The lesson here is that limited means limited. Just because a shoe blows out at retail on a small number of pairs does not guarantee broad commercial success, regardless of how popular the artist may be and how commercially successful they are. High resale value is not an indicator of broad commercial success.

Adidas has signed endorsement contracts with Kanye West and Pharrell Williams, both highly regarded music artists and cultural icons, just as Jay-Z and 50 Cent were.

Brands that are paying artists for their endorsement concerns me for two reasons: First, fans and sneakerheads now know that these artists are getting paid, reducing the specialness that comes from collaborations and two, the brands will now be pressured to monetize these relationships by selling a lot of shoes.

Brands who try to commercialize limited edition products do so at their own peril. If history repeats itself the Adidas/West and Williams collaborations will not be commercially successful.

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Wow worst article ever if you know anything about kanye and pharrel. Obviously this Matt Powell does not. Great writer forbes. Maybe you should have a monkey write your next sneakernomics. One thing you have very wrong is the creative involvement of kanye or pharrel and to compare them to jay and 50 is a joke. And I guarantee Adidas with the help of kanye and pharrel will jump over nike and change many things for the better.

So, there’s only one succesful model – give free shoes to celebrity while the shoe company reaps all the profits from the celebrity’s name and free advertising? Your article lacks dimension and full representation. I’m glad Kanye is smart enough to realize that he won’t continue to let Nike rape his potential earnings like that way anymore. For the artist, any deal is better than the one that you described.

What profits are you talking about? The sales of celebrity shoes are inconsequential as the pairs are very limited. Likely these shoes lost money for the brand, given the high cost of short run production and the amount of free product given away. For instance the Red Octobers amounted to about $250K in wholesales sales. West knew the terms of the deal when he signed up. When he asked to change the deal, Nike declined. Don’t see a lot of abuse there.

Jay-Z and 50 Cent weren’t style icons like Kanye and Pharrell are. Kanye’s previous affiliation with Nike already proved to be insanely influential, and his APC line sold out in seconds. Kanye also is known to have high levels of involvement in the design stage. This piece doesn’t seem to be well-versed in sneakerhead culture.

Jay Z was and is a major style icon. West has never designed anything. I make no attempt to discuss sneakerhead culture. this article is about the business of sneakers and the history of celebrity endorsement failures.

You seem to maintain this idea that Kanye West has never designed anything, and that he is just a figure head for a sneaker comparable to Run-DMC/ Adidas in the 80′s. I suggest you do a little more research about Kanye’s work in the design industry. Here is a link to and article about his first collaboration with Nike and his, and Mike smith’s, development of the Nike Air Yeezy: http://solecollector.com/Sneakers/News/The-Making-Of-The-Air-Yeezy-Upper/ That article shows that since Kanye’s first “endorsed”(as you put it) product, he has been heavily involved with the design process.

If you had taken the time to appropriately research his upcoming collaboration with Adidas you would have discovered that he payed an even heavier role in the design process. Also if you had actually appropriately researched his fallout with Nike, you would have learned that he wanted out because Nike only allowed him to design one limited shoe. Adidas is/has allowed him to design a whole line of products.

Lastly, the fact you persist that Jay Z is a large “Style Icon” in 2014 shows that you do not understand the demographic at which these products are intended for.

Wow, couldn’t have said it better myself @Satbell. I doubt Matt Powell is involved in the hip hop culture–or even fashion– so I’ll forgive him for the foolish parallel of the Run-DMC/G-Unit/ S.Carter brand to Kanye West’s résumé. Compiled with the foolish “West never designed anything” comment, I have truly lost a lot of respect for your article, considering the most minute research would’ve informed you otherwise without even being apart of the fashion/hip-hop culture. Next time Powell, I would be sure not to make illogical generalizations of music artists and most importantly, have more of an clear understanding of West’s unique milestone in the fashion world before knocking him prematurely.

Yes–West spent “an afternoon” “designing” 20 shoes. anyone who knows anything about the design process will know that is not how it is done. I’m sure he shared an idea or two, as he did with the Nike collabs.

First off, why are you bashing West designing capabilities? Are you only allowing him to be successful in music? He’s credited by Nike Creative Director, Mike Smith as being a “natural designer” (sneaker news). He’s collaborated with Louis Vuitton in the past, and now twice with Parisian couture house A.P.C. and of course help designed the Nike Air Yeezy’s. All of these collabs have turned out extremely well commercially. He even has own creative company, DONDA, who designed the Yeezus packaging and the 7-Screen Surround Vision seen at the 2012 Cannes Film Festival.

Let me guess, you’re response will be he didn’t “actually design” these products because they’re all collaborations. Then I’ll say Powell, please give me one example of a product by any shoe or fashion designer that has sold in “commercial quantities” without zero collaboration from others?

Lastly, I never argued that West put out any non-musical products in “commercial quantities”. And what are you proving if he didn’t? Is this a bad thing? When was it ever Nike’s goal to put out the Yeezy’s in commercial quantities?

This is a long useless article. Like I told you on Twitter, Kanye was not hired as the new CFO or head designer at Adidas. Why should there be any expectation for Kanye to help them increase sales? You love undermining that man, but Adidas sales across their entire catalog is not Kanye West’s responsibility. You just want to sound smart to the people at Forbes. You’re no fashion expect, Matt.

How can you even attempt to quantify Kanye and Pharrell’s influence on style without mentioning their past successful collaborations – or the fact that Pharrell owns two of the streetwear industry’s Top 50 or so brands with Ice Cream and Billionaire Boys Club? Jay-Z was not ever and is certainly not now a style icon – especially not in the same breath as Kanye or Pharrell. In fact – the GQ’s and Complex Media’s of the world often champion the latter two while picking apart or satirizing the former. The simple fact is, even neglecting the fact that these two will have more design input than any non-designer on adidas roster being that they are men of unique and discerning taste, that’s not all adidas is paying for. You can’t match LeBron’s contract with Nike dollar for dollar with the expected revenue that his pro models will garner Nike. They’re also paying for the association. The idea that Nike products in general are better because LeBron wears Nike’s – even if you don’t buy LeBron’s Nikes persay. adidas is paying for human ad units – Kanye and Pharrell’s feet and torsos. The immeasurable and unquantifiable “cool” that comes with that association is what adidas had in the 80′s and has hemorrhaged to Nike ever since. Nike owes as much to Tinker Hatfield and W+K as they do Jordan. If adidas resurges in the lifestyle sector, and later (as a direct result) in the performance sectors; it’ll be more thanks to Jeremy Scott, Raf Simons, Kanye West and Pharrell than to Damian Lillard and Derrick Rose.

I’m afraid you have completely missed the point of the blog. West and Williams have never had commercially successful collaborations. Yes–the collaborations have sold out, but never on a mass scale. BBC and Ice Cream are not a commercial businesses. Since Adidas is paying these artists to associate with the brand, the aura of coolness is lost. Williams willingness to collaborate with almost anyone who will pay him has weakened his impact. If Adidas attempts to commercialize these relationships to offset the expense, they will fail. History has shown that. As for “design input”–I’m not sure an afternoon is going to do it.

BBC and Ice Cream are not commercial businesses? Based on what? I’ve attended tradeshows for years in which BBC is consistently booking 10′s of millions of dollars of product four seasons a year in primarily exclusive boutiques that adidas Originals was dreaming of placing their product in until recently. And for the lower end consumer, Ice Cream is widely available through retail chains like Zumiez at shopping malls across America and beyond.

I think that Matt Powell made the distinction between limited and mass produced sales. The economics are interesting. When you see the Kayne West sneakers on the secondary market going for $ 2k or more it makes you think that the potential is promising.You would think that Nike was making money hand or fist. But, the shoes are only in a limited quantity and the fact that they’re not available in stores create an artificial value to them. Only collectors/resellers would pay those prices. I think that it’s a niche market. But, with the right marketing and the right shoe Adidas could definitely add value to their brand which may mean more than the actual sneaker sales.

Mr Powell, contrary to most of the readers, I agree on your point. I do not believe in a commercial success on this kind of limited edition. Besides, I do not think that this kind of large scale collaborations (Adidas and West will collaborate on a true range of products for several years) will have a good impact on Adidas sales. I ve written this post few weeks ago on Adidas collaboration strategy,

Considering this is one of the most legitimate sources on inside information of financial and business ventures and investors (Forbes), I am truly annoyed at the irresponsibility by Matt Powell. Apparently there seems to be this cookie-cutter idea of what sneaker sales are supposed to be. This article uses all the past history of rapper/sneaker brand deals as a means to assert his opinion of what he believes will be the “projected sales performance” of Kanye/Adidas sneakers. However if he even examined his own empirical examples in context, he would understand that in hip-hop culture EVERYTHING is touch and go. As with RUN DMC, Pharrell, Jay Z and 50 Cent, all these sneaker deals consisted of brands/styles merging off the popularity of these artists, both the artist and brand profited from the short-lived deal and then all involved moved forward with their careers and business. The conclusion that all these aforementioned rappers’ sneaker deals didn’t perform well is silly.

Matt also clearly failed or intentionally omitted any acknowledgement of the successful sneaker sales performance of Kanye’s Air Yeezys (Red Octobers) last year with Nike. More recently Kanye and Nike has experienced success with the sell out of the Yeezy Foamposite sneakers. This shows a lack of research and the contributor simply being out of touch with the demographic of consumers and the culture attached to it as well as the basic numbers (sales/profit margins). Matt seems to only manipulate the facts to present it in such a way where it reinforces his opinion on the relationship between rappers and sneaker brands.

Kanye West himself even stated that Nike refused to allow him to have royalties on the Yeezy sneakers since his brand outsold other sneakers under the Nike. According to the tagline of the article, I expected and looked forward to reading some background information regarding Kanye’s sneaker profits with Nike (maybe using this as supporting details for what may come regarding the Adidas deal). Nor the terms of the deal he brokered with Adidas mentioned. The contributor used Kanye’s name in a misleading tagline to lure readers to waste their time with this op-ed piece. This article is a reflection of the marginalization attempted by the media and corporate America to downplay and dismiss the gravity of impact hip hop culture and the celebrities within it have on the general consumer.

Matt, great article, and this TJ Maxx zinger really hammers home your point. Can you please address 50 Cent’s widespread claim that Reebok sold 3.8mm pairs of G-Unit shoes? It’s all over the internet, including Complex. 50 also claims he made $80mm during his Reebok deal and that his shoes outsold Jay-Z’s shoes six-to-one. I guess 50 is lying in order to sound cool & relevant? It’s also funny how commenters on this topic around the web say “just Google ‘S Carter sneakers break sales record’ and you’ll see!!” Well, I Googled it, and the articles from 2003 clearly state the “record breaking” was for a limited run of 10,000 pairs of shoes, so your point stands. Anyway, please address 50′s claims, I need to know the truth for a project I’m working on, thanks!!!